Fundraisers Size up the New Rules

Can charities and agencies live with telling donors how much they are being paid? Emma Rigby reports.
The guidance on ‘solicitation statements’ released by the Office of the Third Sector last week has allayed much of the anxiety about them among fundraisers and their representative bodies.

But there are still uncertainties and concerns, particularly among fundraising agencies, that the statements could have a negative effect on the industry. The important question of enforcement is also yet to be settled.

The guidance relates to the section of the Charities Act 2006 that requires fundraisers and trustees to make a statement explaining their relationship with the charities they work for, if they are paid and, when fundraising for more than one charity, what proportion of donations goes to each. Retailers must also explain what proportion of a charitable sale goes to the cause. The guidance runs to more than 50 pages, with 10 pages of examples included.

Mixed response

Agencies are the least impressed with the new rules. Gordon Michie, director of development at Relationship Marketing, says that if their incomes suffer, charities might be forced to attribute a proportion of fundraisers’ salaries to ‘awareness raising’. ‘It could force us to be less rather than more honest,’ he says.

Kevin Kibble, managing director of Whitewater’s Our Lasting Tribute department, says it will heap pressure on face-to-face and telephone fundraisers. Recent comments by third sector minister Phil Hope about professional fundraisers being an effective way to raise money for charities will sound ‘ pretty hollow’, he says.
Others are more positive. A spokeswoman for the Fundraising Standards Board says: ‘The guidelines embrace the opportunity for charities and fundraising organisations to get the statements right in a workable way.’

The Institute of Fundraising, though sceptical about the law itself, says the guidance is helpful. It believes the exemption of volunteers from making statements favours volunteer-led fundraising and discriminates against third party fundraising. However, it believes professional fundraisers will remain vital to the sector.
Kibble agrees. ‘Generally, volunteers are not much good at asking for the kind of donations that professionals ask for,’ he says.

Michie adds: ‘If it were possible for the charity sector to raise pounds 7bn a year without having to pay people to do it, we’d have been doing it for the past 25 years.’

It has been suggested that public fundraising could turn into prospecting – asking the public to pledge their support rather than donate. Prospecting is exempt from the need for solicitation statements, but follow-up requests for donations through direct mail, email or telephone are not.

The Public Fundraising Regulatory Association thinks prospectors should make statements even though it is not required. Mick Aldridge, chief executive of the PFRA, says: ‘The public can’t tell the difference between a fundraiser and a prospector. If they are used to getting disclosures from fundraisers, they might find it unsettling not to get one from prospectors.’

Despite previous concerns that statements would be prescriptive and misleading, Aldridge is relaxed about the guidance, partly because disclosures can be written (accompanied by verbal prompts to read information) or verbal. This allows fundraisers to put facts into context, he says.

‘Most fundraisers, I suspect, will go over to written disclosures,’ says Aldridge. ‘They will be able to convey pertinent information completely in context.’
Telephone fundraising remains a challenge because telephone solicitation requires a verbal statement. Colin Lloyd, chair of the Telephone Preference Service, suggests that charities follow the example of the financial services industry, which had a similar telephone disclosure requirement imposed three years ago.

‘People were terrified it would be so restrictive that it would prevent certain products being sold,’ he says. ‘But there have been ways through it, and the financial services industry has coped as well as can be expected by being compliant.’

A remaining grey area is enforcement. Infringements of the law attract fines of up to pounds 5,000, but the Institute of Fundraising favours self-regulation rather than enforcement by the police.

Michie says enforcement is the Fundraising Standards Board’s job. ‘You’d have to ask the FRSB whether it would need to pass enforcement costs on to its members,’ he says.
Jon Scourse, chief executive of the FRSB, says it can adjudicate on complaints about statements, judging them against the Fundraising Promise. But he thinks it likely that complaints will mostly be dealt with directly by the charities concerned.